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Can I file bankruptcy if i have equity in my home?
Can I file bankruptcy if i have equity in my home?
All Exemptions Questions & Advice
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My question is about a CD. If I file for Chapter 7, will be certificate of deposit be protected?This site does not provide legal advice and users of this site should not interpret any of the information presented here as legal advice. The information provided merely conveys general information related to commonly asked legal questions. We are not a law firm and the employees responding to questions are not acting as your legal attorney. You should ultimately consult with a Lawyer for your case.
Answers (1)
The fact that you have equity in your home will not prevent you from filing bankruptcy, if you are otherwise eligible to file, but it may affect the issue of whether you get to keep your home or you are forced to liquidate it (sell it) in order to pay debts, and it is likely to affect your choice of which kind of bankruptcy to pursue.
For example, a Chapter 7 bankruptcy is known as a proceeding where major assets are liquidated, some debts are paid, and the remainder of debt balances are discharged. If the equity you have in your home is less than the “homestead exemption” available to you under state law that is also used in your bankruptcy case, you are entitled to keep that money. If you “reaffirm” the mortgage debt with your mortgage holder, you may be able to go on making payments on your home even if you’ve filed a Chapter 7. If you have a lot of equity in your home, Chapter 7 may not be a good choice for you. A Chapter 13 bankruptcy, on the other hand, may allow you to keep your home and thus keep your equity, if you can catch up past-due payments and continue to make current payment over the course of a “repayment period,” that is usually three to five years. A bankruptcy attorney should be consulted for the answer to questions specific to your personal situation.
Talk to a Bankruptcy Lawyer to get advice regarding your situation, and find out if bankruptcy is the right choice for you.
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Posted by Jason Tong on 03 Jun 2010